Release: Lion Energy: Drilling update Nief Utara A-1 well

(23, May 2008)--The Company advises that exploration well Neif Utara A-1 which spudded on February 28th in the Seram (Non Bula) Block Production Sharing Contract on the island of Seram in eastern Indonesia has been suspended as a future oil producer.

Progress update:
? Last casing set was 7 inch at 6,705 feet.
? The well was drilled to a total depth of 7,315 feet measured depth relative to the rotary kelly bushing (RKB MD)
? In the 16 hours prior to shutin for buildup, the well flowed on Electric Submersible Pump (ESP) on a 20/64 inch choke at a stabilized rate of approximately 640 BOPD.
? Crude oil gravity measured at 0.952, corrected to 15 deg F.
? The gas oil ratio (GOR) was measured over the period at a stabilized rate of 0.23 thousand standard cubic feet per barrel (Mscf/BBL)
? Water cut during the period was less than 1%.
? The well was shut-in at 17:00 May 8th 2008. Flowing WHP at shut-in was 538 psig.
? The drilling rig was released from Nief Utara A-1 on May 9th 2008.

Test results for Nief Utara A-1 and electric logs run on the well are being evaluated, prior to further announcements.

Nief Utara A-2
The drilling rig was skidded from Nief Utara A-1 (NUA-1) to Nief Utara A-2 (NUA-2). NUA-2 is being drilled from the same surface location as NUA-1, as a deviated well and will drill to a final bottom-hole location some 1000 metres SE of the NUA-1 well bottom-hole location.

It is intended that NUA-2 will drill to penetrate the water contact, to assist in reserves evaluation of the Nief Utara A structure.

The primary target of NUA-2 is the Manusela Carbonte, with the secondary target the lower part of the Lower Nief carbonate in which an indication of oil show was observed from drill-cuttings in the NUA-1 well.

At 10:00AM on May 19th2008, Nief Utara A-2 spudded.

The well is currently drilling 26 inch hole to a planned depth of 600 feet, at which 18-/5/8 inch casing will be set.

LION, through its wholly owned subsidiary Lion International Investment Limited and its wholly owned subsidiary Lion Petroleum Seram Limited, holds a 2.5% shareholding in the Seram (Non Bula) Block Production Sharing Contract. The major shareholder and Operator of the Joint Venture is CITIC Scram Energy Limited (51%). Other shareholders are KUFPEC (Indonesia) Limited with 30% and Gulf Petroleum Investment (16.5%). (end of edited release)